AT&T; Spins Off Its Wireless Unit Today

NEW YORK — Eight years after AT&T; moved into the mobile phone business by acquiring McCaw Cellular, the time has come to cut the wireless umbilical cord.

AT&T; Wireless Services officially becomes an independent business today, the first step in AT&T;’s sweeping breakup plan. It will be the 10th company spawned by the former U.S. telephone monopoly.

The spinoff was first announced in October when AT&T; aborted its bid to create a one-stop telecom shop by purchasing cable TV systems and upgrading them for phone and high-speed Internet service.

AT&T; Wireless, the nation’s third-largest cellular provider, had about 15.7 million subscribers at last count, up from about 2 million when AT&T; agreed to acquire McCaw for $12.6 billion in August 1993.

A new common stock representing AT&T; Wireless will be distributed as a special dividend to all AT&T; investors before the start of Monday’s trading at a rate of 0.3218 wireless share for each regular AT&T; share.

And all of the so-called tracking shares that AT&T; issued last year to represent the wireless business will be replaced on a one-for-one basis with AT&T; Wireless common stock.

The tracking stock closed Friday at $17.15 a share, so the stock dividend of 0.3218 wireless share was worth $5.52. As part of the process, the price of AT&T;’s regular stock will be adjusted lower by the same amount to $16.72--or $5.52 below Friday’s close at $22.24.

Since AT&T; is one of the most widely owned stocks in the country with nearly 5 million shareholders, AT&T; Wireless will instantly join the same ranks through the special dividend to those investors.

After the spinoff, AT&T; will still own about 188 million shares of the wireless business, a 7.4% stake worth about $3.14 billion. AT&T; chose to hold onto that stock in hopes it can be sold for more when the mood improves on Wall Street.

The biggest single shareholder in AT&T; Wireless will be NTT DoCoMo of Japan with a 17.4% stake, or 448 million shares. The financial services firm AXA owns 168 million shares, or 6.7%, across its various investment funds and holdings.

AT&T; Wireless, based in Redmond, Wash., starts out with about 29,000 employees.